Italian tiles hit by downturn in 2008

As all the analysts and operators were expecting, the Italian ceramic tile industry has not escaped the effects of the international crisis. The industry closed 2008 with a fall in both output volumes (down 6.4% to 523 million sq.m) and sales (down 6.7%), revealing a tendency amongst Italian companies to avoid stockpiling finished products.
As Confindustria Ceramica chairman Alfonzo Panzani and director Armando Cafiero pointed out at the annual press conference, the drop in consumption in the domestic market played a crucial role in these results.
Domestic consumption dropped by 9.2% to 183.5 million sq.m, 19 million sq.m less than the previous year. Of this, 151 million sq.m consisted of Italian products. This is the most dramatic fall since 1993 when consumption dropped by 26 million sq.m but unlike the current year was compensated by the stability of exports. This year by contrast, export sales of Italian ceramic tiles likewise dropped by 19 million sq.m to reach 359 million sq.m (5.2% down on 2007).

This substantial fall in volumes is due to a drop in sales in the two major areas of destination of Italian ceramic products, Western Europe (-6.5%) and North America (-20.6%), only partially offset by growth in demand for ceramic tiles in ‘new EU countries’ (+7.1%), ‘other European countries’ (+4.8%) and Asia (+3.4%).

Total manufacturing costs have risen by 4.64% due to a sharp increase in the costs of natural gas (+14.22%), electrical energy (+6.97%), raw materials (+4.83%), ceramic accessories and outsourced work (+4.65%). Financial expenses have also risen, mainly due to the sharp increase in interest rates over the period in question.

As regards initial forecasts for 2009, given the international uncertainty, Panzani expressed moderate optimism regarding the forecasts made by Prometeia, in spite of the further projected fall. Total Italian production is expected to fall by a further 4.1% next year in response to a 3.8% decrease in total sales.

This includes an anticipated 4.4% fall in domestic sales (compared to 9% in 2008) and a 3.6% decline in exports (5.1% in 2008), although some analysts believe that the United States is likely to emerge gradually from the downturn triggered by the subprime mortgage crisis.